Iowa State University Alumni Association| online edition | fall 2009

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ASK THE EXPERTS:
A HOW-TO GUIDE FOR ASPIRING ENTREPRENEURS

What personal characteristics make someone a good entrepreneur?

Howard Van Auken: There are a lot of traits associated with a successful entrepreneur. Some of my favorites are vision, tenacity, tolerance for ambiguity, ability to take calculated risks, honesty, integrity, independence, and resourcefulness.

Joanne Seymour Kuster: Passion is number one. Also energy, enthusiasm, optimism, adaptability, motivation, the ability to set and prioritize goals, networking skills, and business sense. Exceptional entrepreneurs also have organizational skills, time management ability, and the ability to attract capital.

Marlene S. Lobberecht & Maxine Hammonds-Smith: A good entrepreneur has effective leadership traits that include executive drive, the desire to lead, confidence, good judgment, and technical knowledge.

What’s the difference between being an entrepreneur and being a small business owner?

Van Auken: Entrepreneurship is associated with something new and innovative. A small business doesn’t necessarily innovate or do something new.

Economically speaking, isn’t this a particularly scary time to start a business?

Van Auken: Any time might be considered to be “scary” to launch a new business. There might be fewer opportunities during periods of economic weakness, but there will be opportunities because needs always exist. The difference is that the analysis must be much more careful and detailed during slow economic times to verify that the proposed business is viable.

Kuster: Developing a new venture is always scary, but actually about half the companies listed on the Fortune 500 in 2008 began during an economic recession or depression. People who ordinarily may not be open to taking financial risk to launch a business may have just been downsized, stifled, or shoved aside in corporate America. Given the current economy, there’s never been a better time to strike out on your own.

How can I know if my business idea will fly in the marketplace – without losing my shirt?

Lobberecht/Hammonds-Smith: There are no guarantees, but most new businesses fail due to under-capitalization. A strong business plan with periodic reviews, mentoring, break-even analysis, and monitoring business competition will provide a more accurate reality check. Ideally your credit score should be such that institutions consider you credit-worthy. A set-aside of 20 percent of business income (three to six months expenses for cushion and unexpected emergency expenses) will help keep your shirt.

Give it to me straight: How many new businesses actually succeed, and how many fail? How can I improve my odds?

Van Auken: The odds are against a new firm remaining in operation five years after launch. Some of the main reasons for failure are that the owner doesn’t understand the market, plan (or doesn’t know how to plan), have adequate managerial skills, or enough start-up capital.

Success is dependent on many factors (sometimes even luck) that include, for example, assembling a support team (lawyer, mentor, accountant, banker, insurance agent), having strong family support, having adequate financial and other resources, developing strong business plans, and possessing those entrepreneurial traits. Of course, identifying
a good opportunity is important also.

How can prospective entrepreneurs locate business training opportunities in their areas?

Van Auken: The Small Business Development Center (SBDC) is one of the best places to locate business training opportunities. The SBDC offers training workshops and is well networked into other training opportunities. The Small Business Administration (SBA) is also a wonderful business training resource. Other possible venues for training would include community colleges and chambers of commerce. Most of these entities are well networked so that contacting
one would lead to awareness opportunities at another.

OK, so I am going for it. Where do I begin?

Lobberecht/Hammonds-Smith: An excellent starting point is taking an honest inventory of your personal and professional strengths, talents, academic preparation, certifications, and experiences.

Next, begin detailed planning and research, and complete the free online courses from Service Corps of Retired Executives or SCORE (www.score.org/online_courses.html) and the Small Business Administration (www.sba.gov). The interactive courses (“Quick Start Business Plan,” “Can you afford to start a business?” and “Working out your prices”) will force reflection and answers to questions that you and other business professionals will be asking. Federal/state business regulation information is easily obtained online at www.business.gov.

Your responses to the online course tools will then help you determine your business naming process, business structure requirements, capitalization needs, and potential SCORE mentor to guide your strategic selection of professionals (lawyer, accountant or accounting system, banker, realtor, or small business counselor), your state DBA (Doing Business As) filing, federal tax identification registration, and Web site domain registration. No one will take you seriously until you register your DBA.

What’s the best way to get the word out about my new business? What about using social media?

Kuster: In real estate, it’s location, location, location. In business, it’s marketing, marketing, marketing – or publicity, publicity, publicity. An entrepreneur’s goal is to get someone’s attention, using a number of new tools. Corporations can throw millions at product start-up, but entrepreneurs often cannot.

It’s never been easier to get the word out than today. We have so many Web-based tools, and they can practically mean instant customers around the world. You can have one (or many) Web sites, blogs, Facebook or LinkedIn pages, Twitter accounts, e-mail newsletters, Google Search ads, and so much more.
In some respects, technology is a great equalizer. Consumers don’t care where you are located or whether you have a big office. What’s important is that you offer a quality product or service in a reputable environment.

Lobberecht/Hammonds-Smith: Mastering social media marketing is no different than mastering traditional marketing, except everything is amplified on the Web and infinitely shareable. Thus, it’s essential to be honest, precise, and thoughtful with every action you take, because everyone is watching, and your successes and failures are magnified.

Enough about me. How can I help instill
an entrepreneurial spirit into my kids?

Kuster: Most children are born curious and creative. They absorb parental views on many things. I remember telling one of my kids that finding the right career is like being able to play all day – it’s just fun to go to work.

Here’s how to encourage entrepreneurship in your kids:
• Play family games; build and create things together.
• Build skills by doing DIY home projects.
• Provide opportunities for money-making.
• Make family meals a time for discussion.

Successful entrepreneurs need a good sense of money and its power. Financial education begins at home – earning, spending, saving, investing, borrowing,
and sharing. Kids who handle real money, open bank accounts, save to buy something big (like a car), learn to pick stocks to invest in, share their fortunes with
others, and balance earnings with expenses are better equipped to be financially savvy entrepreneurs.

What advice would you give to dreamers/risk takers who are considering starting their own businesses?

Van Auken: Entrepreneurship is part of the human dream – being independent and rewarded for your own efforts. My advice is: Have a clear vision of what you want to accomplish; work with your start-up team; plan, plan, plan; ensure that you have family support; verify that you have adequate resources, especially financial resources; and maintain high integrity and honesty. Success doesn’t happen easily, so don’t give up quickly.

Lobberecht/Hammonds-Smith: Ultimately, to bottom-line succeed, your business needs an objective viewpoint. Without one, you might learn the hard way that you’re the only one who loves your concept. Ask people what they think; accept positive and negative feedback so you may identify and resolve a potential critical flaw. Create realistic financial, promotional, and debut plans. This isn’t the time for glowing optimism.

Kuster: You will never succeed until you try. Many of us have an idea for a product, business, or book inside, just waiting to be developed. But we aren’t willing to take the risk. It takes courage to be an entrepreneur.

THE EXPERTS:

Howard Van Auken is a university professor of management and holds the Bob and Kay Smith Fellowship in Entrepreneurship in the ISU College of Business.

Joanne Seymour Kuster (’76 home economic
journalism) is the co-founder of Kuster Ltd.,
a marketing communications company, and is author of the children’s book Entrepreneur Extraordinaire: Grandpa Helps Emily Build a Business. She and Chuck Kuster (’76 ag journalism), her entrepreneur husband, live in Johnston, Iowa.

Marlene S. Lobberecht (MS ’80 home economics education) is owner and business development director of Intellaskill. Maxine Hammonds-Smith (MS ’80 family environment, PhD ’82) is president of the National Council on Family Relations. Lobberecht and Hammonds-Smith co-authored the book Bottom Line Quick Start for Emerging Entrepreneurs. They both live in Houston, Texas.

ISU RESOURCES FOR ENTREPRENEURS

For alumni, For Iowans

ISU Pappajohn Center for Entrepreneurship
Located in Iowa State University's Research Park, the Pappajohn Center is the catalyst that brings together the people and ideas necessary for launching or growing successful enterprises.
The center is a gateway that connects Iowa's business and entrepreneurial community to an array
of resources and information within Iowa State.
www.isupjcenter.org

ISU Research Park and Business Incubators
Research Park is a technology community of more than 50 companies. The Park links technology
creation, business formation, and development assistance with established technology firms
and the marketplace. www.isupark.org

Iowa State University Research Foundation (ISURF)
ISURF owns and licenses technology developed
at Iowa State. Entrepreneurs who are interested in technology developed at ISU may contact ISURF for help in transferring the intellectual property.
www.techtransfer.iastate.edu/

Institute for Physical Research and Technology (IPRT)
IPRT provides a variety of technical assistance to
Iowa companies. IPRT’s Technology Commercial-ization Group provides early assistance and funding on research and development projects.
www.iprt.iastate.edu

Ames Laboratory
Ames Lab assists with sponsored research and technology transfer. www.ameslab.gov

Small Business Development Center (SBDC)
Located at the ISU Research Park in Ames, the
ISU SBDC provides central Iowa business owners and prospective owners with assistance in strategic planning, management, sources of capital, marketing, international trade, accounting, financial analysis, and more. Also available is the Smart Start Workshop, a weekly business basics class.
www.iowasbdc.org/regional-centers/ames.aspx

Office of the Vice President for Research and Economic Development
Helps take ideas to market or grow existing businesses. Areas include biotechnology, food safety and security, human nutrition, programs dealing with rural America, and many more.
www.vpresearch.iastate.edu

Innovations Development Facility
The Plant Sciences Institute Innovations Development Facility features a Public/Private Partnership Program for private sector companies to collaborate with ISU scientists.
www.plantsciences.iastate.edu/colab/

College of Business
The ISU College of Business provides businesses with feasibility studies, technology solutions, sales force training, strategic planning, market research, and more. www.business.iastate.edu/

Small Business Assistance
The Small Business Innovation Research and Small Business Technology Transfer programs
provide assistance in matching companies to
federal research topic solicitations, identifying
subcontract possibilities, and reviewing proposals for technology-based businesses working with ISU.
www.techtransfer.iastate.edu/en/sbir_sttr_
assistance/

Center for Crops Utilization Research
The Center contains pilot-scale equipment for
the development of new products, markets, and processing techniques for agricultural products and their components.
www.ag.iastate.edu/centers/ccur/

University Extension
Through ISU Extension, the Value Added Agriculture Program provides unbiased, science-based information to help establish or expand agricultural-related businesses in Iowa. The Agricultural Marketing Resource Center allows entrepreneurs to investigate market and industry trends and study business creation and operation.
www.extension.iastate.edu/valueaddedag
www.agmrc.org/

Society of Entrepreneurial Alumni
Connect with like-minded alumni through the ISU Alumni Association’s Society of Entrepreneurial Alumni. Share success stories (and failures) that may help other alumni in their entrepreneurial pursuits and throw out ideas for brainstorming and feedback. This informal resource is available through CySpace. To join, log on to CySpace (http://cyspace.isu alum.org) and search for “Entrepreneurial” under “My Groups” or call 515-294-1955.

For Iowa State students

Entrepreneurship and Innovation Learning Community
Housed in Buchanan Hall, students share ideas and work together as owners/operators of an espresso café. www.isupjcenter.org/ELC

Entrepreneurial studies minor
Any undergraduate student can seek a minor
that can be tailored to his or her own unique
learning experience.
www.business.iastate.edu/undergraduate/
minors/entrepreneurship/

ISU Pappajohn Center for Entrepreneurship
Connects students to the entrepreneurial world,
providing speakers, internships, and experiential
learning opportunities. www.isupjcenter.org

ISU Entrepreneur Club
Open to all students; provides networking,
learning, event, and community opportunities.
www.isupjcenter.org/programs/eclub/

Okoboji Entrepreneurship Institute
A weeklong retreat for advanced entrepreneurial
study that connects students with business leaders.
www.isupjcenter.org/programs/okoboji/

Pappajohn New Venture Business Plan Competition
Awards seed grants to the top three business plans
submitted. www.isupjcenter.org/programs/newventure/

Entrepreneur Forums
Allow students to learn from and interact with
successful entrepreneurs, venture capitalists,
and business consultants. www.isupjcenter.org/programs/forums/

Iowa Venture Capital & Entrepreneur Conference
Networking opportunities, workshops, and keynote
presentations. www.isupjcenter.org/programs/vcec/

New Venture Lab
Provides resources for market research and business plan writing. www.isupjcenter.org/learning/labs/newventure/

CEO National Conference
Brings together young entrepreneurs from across
the country to share ideas and expertise.
www.isupjcenter.org/programs/ceo/

Reiman Entrepreneurial Speaker Series
Speakers visit campus to interact with students, faculty, and business leaders.
www.isupjcenter.org/programs/reimanspeakers/

The Agricultural Entrepreneurship Initiative
Offers an entrepreneurial internship each summer,
placing students with agricultural firms across Iowa, many started by ISU grads.
www.entrepreneurship.ag.iastate.edu

Learning Design Solutions
A student-led organization in the College of Human Sciences that provides educational technology consulting services and creates a context for student members to develop entrepreneurial skills. www.ctlt.iastate.edu

Scholarships
ISU entrepreneurial scholarships include:
• Pappajohn Entrepreneur Scholarship
• Reiman Scholars in Entrepreneurship
• Madolyn Johnson Entrepreneur Scholars
• Barbara King Landscape Architecture Scholarships
for Innovation and Entrepreneurship
• Bob Jolly Entrepreneurship Scholarship